Healthcare Technology & Distribution JPM

J P M O R G A N North America Equity Research
14 December 2022
Healthcare Technology &

Distribution
2023 Outlook: Down But Not Out; Stocks for the Short,
Medium & Long Term
2022 was a difficult year for the Healthcare Technology and Distribution Healthcare Technology &
Space as profitability and cash flow came into focus and growth fell out of Distribution
favor. While fundamentals were still largely intact in the first half of the Anne E. Samuel AC
(1-212) 622-4163
year, macro pressures began to surface in the latter portion, and we expect anne.e.samuel@jpmorgan.com
some of these issues to continue to pressure growth in 2023. While we Bloomberg JPMA SAMUEL <GO>
expected labor shortages to be a tailwind for those that could automate and Kyle Aikman
drive efficiency for clients, the financial constraints those placed on (1-212) 622-0522
kyle.aikman@jpmchase.com
hospitals were too much to overcome and resulted in elongated sales cycles,
Destiny Jackson
as providers more closely scrutinize spending. On the Life Sciences side, (1-212) 622-4360
reduced funding has also caused some pressure, particularly around destiny.jackson@jpmorgan.com
advertising and early-stage development. Digging into the fundamentals, J.P. Morgan Securities LLC
we model 14% YoY revenue growth in 2023, versus 13% in 2022, resulting
in 18% EBITDA growth vs. ~10% in 2022. We expect important themes
like value-based care and the consumerization of healthcare to remain in
favor, but we also expect macro themes to come into play such as labor
shortages, hospital spending pressures, Life Sciences funding, and a focus
on employment in a recession. Given all of the macro moving pieces,
timing will be important next year, and so we bucket our top picks for 2023
into 3 categories: (1) Near term: EVH & HQY, (2) Medium Term: IQV &
RCM, and (3) Longer term: PGNY, PHR. Herein we outline our thoughts
on the 2023 setup for the models, dig deep into key themes, and provide our
views on top picks. We will be hosting a call discussing our outlook with
JPM Managed Care & Facilities analyst Lisa Gill on Wednesday,
December 14, at 10:00am ET (register for the call here).
• 2022 performance was disappointing, with hospital-exposed names
underperforming the group. Following a disappointing 2021
performance, 2022 revealed additional challenges with the group down
~20% vs. SPX down ~16%. The group’s poor performance spanned
across our coverage universe with the lowest performers being OMCL
down 72%, HCAT down 71%, RCM down 57%, DH down 56%, PGNY
down 37%, VEEV down 31%, DOCS down 27%, IQV down 23%,
PINC down 18%, and PHR down 16%. Outperformers in 2022 were
HQY, which was up 37%, MODN up 37%, NXGN up 7%, EVH up 2%,
MDRX up 1%, and CCSI up 1%.
• We expect value-based care and consumer disruption to remain
important trends, but we also think macro will continue to
dominate conversations in 2023, particularly around labor
shortages, hospital spending pressures, Life Sciences funding, and
See page 38 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.
www.jpmorganmarkets.com
Anne E. Samuel North America Equity Research
(1-212) 622-4163 14 December 2022 JPMORGAN
anne.e.samuel@jpmorgan.com
employment in a recession. Longer term, we see the shift to value-based care

and the consumerization of healthcare as two trends that will drive tech adoption
in healthcare. We would also call out the whitespace in the fertility market and
the drug development pipeline as two other secular tailwinds to monitor long
term. Despite these, we believe lingering labor shortages, a ramp-down of Life
Sciences funding from 2021 highs, and unemployment risk in a recession will
drive near-term sentiment on our coverage, and as we expect these headwinds to
persist into 2023, we believe it will put a drag on NT growth for many Healthcare
Technology companies.
• We are bucketing our top picks into 3 categories for 2023; timing will be
important given uncertainty around macro and the likelihood for the
fundamental backdrop to change.
• Near Term (3-6 months)
• We view Evolent as a more defensive play as the company has already
provided preliminary guidance for 2023 with partnerships added in 2022
driving good visibility to revenue for 2023. This stock has been a good
place to hide this year, and we expect the same next year as the company
has done well with executing the turnaround. The financial algorithm is
attractive at 25% revenue growth in 2023 and 42% EBITDA growth, and
the company’s 4Q guide in February 2023 could act as a further positive
catalyst for the stock. See herein for our incremental model work around
potential 2023/2024 margins.
• We also like HealthEquity for the near term as rates continue to favorably
impact the company's yield on custodial assets. We also like the move into
enhanced yields and reducing the variable portion of deposits, which
should provide some downside protection in the event that rates move
downward. While the fundamentals will continue to be strong once rates
stop rising given the company’s laddered investment strategy and we
continue to like the long-term opportunity for growth, we would expect
the stock momentum to stop with rates given the outsized performance
this year.
• Medium Term (6-9 months)
• IQVIA stands out in our space as having a consistent track record, strong
free cash flow generation, scale, and a good financial profile making it an
attractive place to weather a storm, in our view. While near term the
company has spoken to operational challenges from labor attrition/
shortages, Russia/Ukraine, and China lockdowns, it has accelerated its
cost-reduction program in hopes to see modest margin expansion in 2023.
In the near term, we think resolution of these issues and execution of debt
reduction will be important, resulting in our more medium-term
positioning for the stock. Finally, we think it is important to differentiate
between operational challenges and underlying demand, noting recent
commentary on the overall demand environment was very positive and the
company has not yet seen any slowdown in demand.
• We expect R1RCM to be a “show me” story in 2023 given lack of
visibility, and resolution of recent operational challenges will be
important to get the stock going again. Specifically, higher-margin
2
incentive fees are likely to remain under pressure in 2023, and incremental
recession risk could come from utilization (every 1% = 60bps of growth)
and reduced collections (patient self pay = 20% of collections). The fact
remains that while we have reduced our 2024E EBITDA by 10-15%, and
are assuming a 30% discount to forward organic growth to value the
company given the near-term headwinds, we still see upside from current
levels assuming 2024 improves. As such, we continue to rate the shares
Overweight, taking a more medium-term view with expectations for the
stock to remain under pressure in the near term. See herein for our
incremental model work on the name.
• Longer Term (9-12 months)
• Progyny remains our favorite long-term opportunity in our space, but we
acknowledge that unemployment fears are likely to weigh on the stock in
the near term. Taking a higher level view, we point to PGNY’s positioning
in a fertility market that is growing HSD annually and is ripe for
disruption, with substantial greenfield opportunity ahead given <50%
penetration today. Looking more from a bottom-up view, we point to
continued execution of new client growth, as PGNY has grown its
penetration of self-insured employers from 0.4% in 2018 to 3.5% in 2022,
and 4.4% in 2023 at an average of ~60 bps of penetration a year
accelerating to 88 bps of penetration in 2023. Extrapolating this to the
model, every 75bps of continued annual capture beyond 2023 would
equate to ~20% longer-term revenue growth for PGNY. Finally, we would
point to the recent strong selling season results with the company not yet
seeing any slowdown in demand despite employers starting to feel
pressure, noting the company embedded flat organic growth in 2023
member guidance vs. a historical 100-200k increase to account for
potential customer layoffs. While we acknowledge rising unemployment
could result in fewer covered lives and more difficulty selling a new
benefit, we would not expect it to impact short-term benefit utilization
given the time sensitive nature of the condition, and we would expect
continued strength in long-term demand due to the underlying societal
factors leading to higher utilization of Assisted Reproductive Technology.
• We continue to like Phreesia’s long-term white space for growth and
point to the recent expansion of the TAM to $10B as the company moves
into the payer space. More specific to the model, we are very encouraged
by 36% new logo growth TTM as demonstrative that the product is
resonating in the marketplace. Phreesia’s land and expand model will
benefit from this share capture over time, as these new customers mature
and grow their spend with the company, and we think this will drive
sustainable growth. That said, profitability remains a key focus for
investors, and we expect the stock to continue to move with the company's
continued execution on that front. Specifically, next year is set to improve
from this year’s low mark, and the company expects to reach profitability
in FY25.
• Digging into fundamentals: Who has the growth, and who will be pressured
by macro? We model an average 14% revenue growth across our coverage
universe in 2023, which compares with 13% in 2022, but there is a wide variation
3
within that. Phreesia should see the most growth next year with our estimates
pointing to ~28% YoY revenue growth. Progyny should also grow ~28% next
year, and we expect similar growth from R1 RCM inclusive of Cloudmed (11%
on an organic basis). We expect Evolent to grow 25%+ YoY accounting for its
new partnerships, noting the recent NIA acquisition should contribute an
incremental 1,800bps+ of growth next year. There are several companies in our
space that should see low- to mid-teens top-line growth next year including
Definitive Healthcare (growing EBITDA at 15%), Veeva Systems (growing
EBITDA at 9%), and Health Equity (with accompanying 22% EBITDA growth).
Lagging the group, we see LSD-HSD top-line growth from PINC, IQV, HCAT,
MDRX, NXGN and CCSI. We expect Omnicell to see a 1.8% decline in revenue
for the year. See herein for company-specific model drivers and our extra model
work on EVH and RCM.
• What were clients focused on in 2022? Digging into readership & interaction
data. Taking a look back at what clients were focused on in 2022, we dug into
client interactions and notes with the highest readership. In terms of interactions,
we saw the highest volume on 1) PGNY, 2) EVH, 3) IQV, 4) HQY, 5) RCM, 6)
SGFY, 7) OMCL, 8) PHR, 9) HCAT, and 10) VEEV. Looking at readership, a
majority of the top read notes were recaps of conferences or earnings, but we
would call out our Back to School Roadmap and our VEEV deep dive as some
notable standalone notes. We have included herein links to our most read notes
as well as links to the notes we believe have shelf life, including our sector and
company deep dives & initiations.
All pricing as of December 13, 2022, unless otherwise indicated.
4
Table Of Contents
2022 Exhibited Heightened Challenges Compared with
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Group Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Looking Back: Our Top Notes of 2022. . . . . . . . . . . . . . . . . . . . . . 9
Who Has the Growth and Profitability in 2023? . . . . . . . . . . . . . 11
Key Components of the 2023 Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Where We’ve Done Some Extra Math on the Models . . . . . . . . . . . . . . . . 14
M&A Was a Key Growth Driver in 2022. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
NT Macro Pressures in Our Coverage . . . . . . . . . . . . . . . . . . . . . 17
Labor Pressures Arose Prior to COVID and Remain a NT Headwind . . . . 17
The Potential Impact of Rising Unemployment on Benefits Providers . . . 20
Increased Hospital Spending Continues to Impact Margins . . . . . . . . . . . 21
A Decline in Life Sciences Funding Has Resulted in Belt-Tightening . . . . 22
Compiling Commentary: A Weakening Macro Is Tightening Belts Across
Healthcare, with Headwinds Expected to Be Sustained into 2023 . . . . . . . . . 23
LT Themes in Our Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Rising Out-of-Pocket Costs Are Leading to Consumer-Focused
Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
An Increasing Prevalence of Value-Based Care Spurs Data & Analytics
Adoption in Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Tech Enablement Is a Downstream Impact in the Shift to Value-Based
Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Other Drivers of Data & Analytics Adoption . . . . . . . . . . . . . . . . . . . . . . . 32
Patent Cliffs & the Drug Development Pipeline . . . . . . . . . . . . . . . . . . . . . 34
The Fertility Industry Still Has Ample Whitespace for Growth . . . . . . . . . . 34
5
2022 Exhibited Heightened Challenges

Compared with 2021
Following a disappointing 2021 performance, 2022 revealed additional challenges with
the group down ~20% vs. SPX down ~16%. The group’s poor performance spanned
across our coverage universe with the lowest performers being OMCL down 72%,
HCAT down 71%, RCM down 57%, DH down 56%, PGNY down 37%, VEEV down
31%, DOCS down 27%, IQV down 23%, PINC down 18%, and PHR down 16%.
Outperformers in 2022 were HQY, which was up 37%, MODN up 37%, NXGN up 7%,
EVH up 2%, MDRX up 1%, and CCSI up 1%.
Key catalysts that drove major stock reactions this year included R1 RCM’s
acquisition of Cloudmed in 1Q, MDRX’s sale of its Hospitals and Large Physician
Practices business in 1Q, EVH’s announcement of four new partnerships in 1Q, HQY’s
tailwind of rising rates and strong HSA growth, EVH’s acquisition of IPG in 2Q, EVH’s
4Q announcement of BHG no longer offering individual and family plan products or
Medicare Advantage products outside of California and Florida in 2023, RCM’s
implementation difficulties with two major partners in 3Q, and OMCL’s lowered NT
guidance due to hospital budget constraints in 3Q.
Figure 1: Healthcare Technology YTD Performance vs. SPX (as of 12/13/22)

105
100
95
90
85 -16%
80
-20%
75
70
65
60
Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22
S&P 500 HCIT Index Coverage
Source: Bloomberg Finance L.P.
6
Figure 2: Healthcare Technology Annual Stock Performance, 2018-2022

50%
38%
40%
28% 29% 27%
30% 23%
20% 16%
10% 5%
0%
-10%
-6%
-20% -16%
-20%
-30%
2018 2019 2020 2021 2022 YTD
HCIT Average SPX
Source: Bloomberg Finance L.P. Priced as of 12/13/22.
On an individual stock basis, HQY, MODN, NXGN, EVH, MDRX, and CCSI
outperformed the SPX year to date, while in 2021 EVH, OMCL and MDRX
outperformed the market.
Figure 3: Healthcare Technology Individual Stock Performance, 2022 Figure 4: Healthcare Technology Individual Stock Performance, 2021
60% 80% 73%
37% 37% 60% 50%
40%
40% 28% 27%
19% 18% 17% 15%
20% 7% 20% 6%
2% 1% 1% HCIT Average = 5%
0% 0%
-20%
-20% -2% -9%
-40% -23%
-16% -16% -18% -23%
-40% HCIT Average = -20% -27% -31% -60% -37% -36%
-37% -55%
-60% -80%
-56% -57%
SPX
SGFY*
CNVY*
EVH
OMCL
PINC
RCM
PHR
HQY
MDRX
CERN
PGNY
CHNG
NXGN
HCAT
-80% -71% -72%
CCSI
DOCS
SPX
PHR
DH
MODN
OMCL
EVH
VEEV
MDRX
IQV
RCM
HCAT
HQY
NXGN
PGNY
PINC
Source: Bloomberg Finance L.P. Priced as of 12/13/22. Source: Bloomberg Finance L.P.
SGFY*: Initial Trading Day (2/11/21)
CNVY*: Initial Trading Day (6/16/21)
Group Valuation
The Healthcare Technology space currently trades at an average 4.0x EV/Sales on
2024E revenue growth of ~14%, equating to a 0.3x EV/Revenue/Growth multiple.
While some companies in our space are not yet profitable, on an EV/EBITDA basis, the
group trades at 15.0x 2024E EBITDA, or 0.9x EBITDA growth.
7
Figure 5: Healthcare Technology Coverage Average Forward EV/Sales
6.0x
5.5x
5.0x
4.5x
4.0x
3.5x 4.0x
3.0x
HCIT Average Forward EV/Sales
Source: Bloomberg Finance L.P., J.P. Morgan estimates. Priced as of 12/12/2022.
Figure 6: Healthcare Technology Coverage Average Forward EV/EBITDA

23.0x
21.0x
19.0x
17.0x
15.0x
13.0x 15.0x
11.0x
9.0x
7.0x
5.0x
3.0x
HCIT Average Forward EV/EBITDA
Source: Bloomberg Finance L.P., J.P. Morgan estimates. Priced as of 12/12/2022.
Table 1: Healthcare Technology Comparable Valuations

Price JPM JPM Market Stock Performance EV/EBITDA EV/EBITDA to Growth EV/Sales EV/Sales to Growth
Company Ticker 12/13/2022 PT Rating Cap 2021 YTD 23E 24E 2024E 2023E 2024E 2024E
Allscripts MDRX $18.70 $20.00 UW 2,043 28% 1.36% 9.0x 8.1x 0.7x 2.7x 2.5x 0.4x
Cons. Cloud Solutions CCSI $58.55 $54.00 N 1,161 62% 1.18% 8.7x 8.2x 1.4x 4.7x 4.4x 0.8x
Definitive Healthcare DH $11.96 $14.00 N 1,915 1% (56.24%) 32.9x 25.1x 0.8x 9.4x 7.9x 0.4x
Doximity DOCS $36.72 $60.00 UW 7,068 93% (26.75%) 29.1x 24.6x 1.3x 12.8x 10.6x 0.5x
Evolent Health EVH $28.17 $47.00 OW 2,851 73% 1.81% 21.5x 15.7x 0.4x 1.9x 1.6x 0.1x
Health Catalyst HCAT $11.32 $15.00 N 620 (9%) (71.43%) NM NM NM 1.6x 1.4x 0.1x
HealthEquity HQY $60.49 $84.00 OW 5,120 (37%) 36.73% 17.9x 15.6x 1.0x 6.0x 5.5x 0.5x
IQVIA IQV $216.80 $257.00 OW 40,268 57% (23.16%) 14.2x 12.8x 1.2x 3.3x 3.0x 0.3x
Model N MODN $41.00 $38.00 OW 1,532 (16%) 36.53% 36.0x 29.5x 1.3x 5.9x NA NA
NextGen NXGN $19.02 $18.00 UW 1,286 (2%) 6.91% 10.1x 9.2x 1.0x 1.8x 1.7x 0.3x
Omnicell OMCL $50.02 $57.00 N 2,233 50% (72.28%) 15.0x 10.7x 0.3x 2.0x 1.8x 0.2x
Phreesia PHR $35.11 $38.00 OW 1,852 (23%) (15.72%) NM NM NM 4.6x 3.6x 0.1x
Premier, Inc. PINC $33.74 $30.00 N 4,008 17% (18.05%) 7.7x 7.2x 1.0x 2.9x 2.8x 0.5x
Progyny PGNY $31.77 $62.00 OW 2,951 19% (36.90%) 16.6x 12.4x 0.4x 2.8x 2.2x 0.1x
R1RCM RCM $11.06 $11.00 OW 4,607 6% (56.61%) 10.5x 8.1x 0.3x 2.7x 2.3x 0.1x
Veeva Systems VEEV $176.96 $170.00 N 27,551 (6%) (30.73%) 26.4x 22.4x 1.2x 10.1x 8.7x 0.5x
HCIT Average 6,692 20% (20%) 18.3x 15.0x 0.9x 4.7x 4.0x 0.3x
Source: J.P. Morgan estimates, Bloomberg Finance L.P.
8
Looking Back: Our Top Notes of 2022

Our top 10 most read notes of 2022:
1. Our Takes from the Inaugural J.P. Morgan Value Based Care Summit
2. Back to School Roadmap: A Brief Summary of Top Themes & Ideas in Our Space
3. Veeva Systems : Digging Deeper: Room to Expand in a $13B TAM Growing MSD;
NT Macro Keeps Us Neutral
4. 2Q22 Preview: Focus Points for the Prints & Model Positioning
5. 3Q22 EPS Preview: Focus Points for the Prints, Model Positioning, and 2023
Building Blocks
6. Signify Health: CVS Health to Acquire SGFY for $8B, Our Initial Thoughts On the
Transaction
7. DOJ Suing to Block UNH’s Acquisition of CHNG; No Impact to Bullish UNH
Thesis or CHNG Fundamentals
8. 3Q Post Mortem; A Volatile Q With Hospital Exposure Pressuring Demand - Where
Do We Go From Here?
9. R1 RCM : Acquisition + $10B Contract + Labor Shortages Make RCM Attractive
Here, Move to OW from NR
10. Progyny : Roe v. Wade Overturned; Trigger States = 3% of Revenue but Watching
for Future Impact to Fertility
Notes with shelf life:
• Deep Dives:
• Actionable Insights: Digging in on Interoperability; a Well-Defined Goal with a

Murky Path to Completion
• Actionable Insights: Fertility 101 - Market Backdrop is a BFP
• Actionable Insights: A Tight Labor Market Presents An Opportunity for Tech
Enablement
• Actionable Insights: Digging In On the Shift to Value Based Care
• Recent Initiations / Coverage Launches
• Definitive Healthcare: Digging Deeper: Compelling Growth Opportunity &

Financial Profile, but NT Macro Holds Us Back
• Consensus Cloud Solutions: $11B TAM + MSD/HSD Growth Profile, but NT
Macro Presenting Headwinds; Initiate at Neutral
• Veeva Systems: Digging Deeper: Room to Expand in a $13B TAM Growing
MSD; NT Macro Keeps Us Neutral
• IQVIA Holdings Inc: Digging Deeper: A Core Holding With Attractive Growth
& Free Cash
9
Using our log of client interactions, we compiled a list of our top 10 names with the
most interactions this year. We would note that both IQV and VEEV were picked up
midyear, and had we covered them for the full year, they would likely be higher.
1. Progyny (PGNY)
2. Evolent Health (EVH)
3. IQVIA (IQV)
4. Health Equity (HQY)
5. R1 RCM (RCM)
6. Signify Health (SGFY)
7. Omnicell (OMCL)
8. Phreesia (PHR)
9. Health Catalyst (HCAT)
10. Veeva Systems (VEEV)
10
Who Has the Growth and Profitability in

2023?
We model an average of 14% revenue growth across our coverage universe in 2023,
which compares with 13% in 2022, but there is a wide variation within that.
Top Growers in the Space: Phreesia should see the most growth next year with our
estimates pointing to ~28% YoY revenue growth. Progyny should also grow ~28% next
year, and we expect similar growth from R1 RCM inclusive of Cloudmed (11% on an
organic basis). We expect Evolent to grow 25%+ YoY accounting for its new
partnerships, noting the recent NIA acquisition should contribute an incremental
1,800bps+ of growth next year.
There are several companies in our space that should see low- to mid-teens top-line
growth next year including Definitive Healthcare (growing EBITDA at 15%), Veeva
Systems (growing EBITDA at 9%), and Health Equity (with accompanying 22%
EBITDA growth).
Lagging the group, we see LSD-HSD top-line growth from PINC, IQV, HCAT, MDRX,
NXGN and CCSI. We expect Omnicell to see a 1.8% decline in revenue for the year.
Top names on a combined profitability and revenue growth basis: On a “Rule of 40”
basis, CCSI ranks the highest in our group as a rule of 59 company in 2023, followed by
RCM as a rule of 54 (inclusive of Cloudmed), VEEV at 51, HQY at 47, PINC at 46,
PGNY at 45, and DH at 44. The rest of the companies in our coverage fall below the
“Rule of 40” with PHR and HCAT scoring the lowest at 8 and 9, respectively. On
average, the group is at 36 in terms of rule of 40.
Table 2: Healthcare Technology Top-Line Growth, 2018-2024E

Revenue Growth YoY 2018 2019 2020 2021 2022E 2023E 2024E 19-22E CAGR 23E-24E CAGR
Phreesia PHR 25% 25% 19% 43% 31% 28% 28% 31% 28%
R1RCM RCM 93% 37% 7% 16% 22% 28% 17% 15% 17%
Progyny PGNY 117% 118% 50% 45% 56% 28% 26% 50% 26%
Evolent Health EVH 45% 34% 9% -2% 48% 25% 16% 17% 16%
Definitive Healthcare DH 40% 33% 15% 19% NA 19%
Health Equity HQY 25% 85% 38% 3% 13% 13% 10% 17% 10%
Veeva Systems VEEV 25% 28% 33% 26% 16% 13% 16% 25% 16%
Premier, Inc. PINC -8% -15% 17% 17% -20% 8% 5% 3% 5%
IQVIA IQV 29% 6% 2% 22% 3% 8% 10% 9% 10%
Health Catalyst HCAT 54% 38% 22% 28% 14% 8% 15% 21% 15%
Allscripts MDRX 16% 1% -9% -7% -59% 7% 7% -30% 7%
NextGen NXGN 0% 2% 3% 7% 6% 6% 6% 5% 6%
Cons. Cloud Solutions CCSI 7% 5% 6% NA 6%
Omnicell OMCL 10% 14% -1% 27% 13% -2% 11% 13% 11%
Average 36% 31% 16% 21% 13% 14% 14% 15% 14%
Median 25% 26% 13% 22% 14% 11% 13% 16% 13%
Source: Company reports and J.P. Morgan estimates.
11
Table 3: Healthcare Technology EBITDA Growth, 2018-2024E

EBITDA Growth YoY 2018 2019 2020 2021 2022E 2023E 2024E 19-22E CAGR 23E-24E CAGR
Evolent Health EVH 60% 54% 42% 36% -310% 36%
R1RCM RCM 1290% 195% 43% 43% 22% 42% 30% 36% 30%
Progyny PGNY 1184% 78% 107% 85% 36% 34% 89% 34%
Health Equity HQY 40% 66% 23% -2% 13% 22% 15% 11% 15%
Premier, Inc. PINC 9% -1% -10% -2% -5% 16% 7% -6% 7%
Definitive Healthcare DH 53% 26% 5% 12% 15% 31% 14% 31%
Allscripts MDRX 9% -1% 5% -4% -43% 13% 11% -17% 11%
Veeva Systems VEEV 41% 38% 39% 28% 8% 9% 18% 25% 18%
IQVIA IQV 9% 8% -1% 27% 10% 8% 11% 12% 11%
NextGen NXGN 13% -2% 2% 1% -2% 7% 10% 0% 10%
Cons. Cloud Solutions CCSI -7% 5% 6% NA 6%
Omnicell OMCL 44% 32% -4% 44% -22% -5% 40% 2% 40%
Health Catalyst HCAT NA NA
Phreesia PHR -28% -22% NA NA
Average 182% 140% 16% 28% 10% 18% 21% -13% 21%
Median 26% 32% 5% 27% 9% 14% 16% 11% 16%
Table 4: Healthcare Technology “Rule of 40,” 2018-2024E

Rule of 40 Column1 2018 2019 2020 2021 2022E 2023E 2024E
Cons. Cloud Solutions CCSI NA NA NA 62 60 59 60
R1RCM RCM 100 51 26 39 45 54 46
Veeva Systems VEEV 62 68 74 69 56 51 55
HealthEquity HQY 66 122 71 34 44 47 45
Premier, Inc. PINC 31 31 52 47 15 46 44
Progyny PGNY 118 126 60 59 72 45 44
Definitive Healthcare DH NA NA 45 74 61 44 50
Allscripts MDRX 33 17 10 13 (31) 36 38
Evolent Health EVH 49 33 13 5 55 33 26
IQVIA IQV 51 28 23 44 27 31 33
NextGen NXGN 21 23 23 26 23 24 25
Omnicell OMCL 26 33 17 47 27 12 28
Health Catalyst HCAT 20 20 11 23 13 9 19
Phreesia PHR 29 29 22 16 (4) 8 29
Average 43 41 32 40 33 36 39
Median 32 30 23 42 36 40 41
Key Components of the 2023 Models

A number of our companies have provided guidance or modeling color for 2023 already,
which we outline below:
• Consensus Cloud Solutions expects slower decision cycles to shift ~$3M of

revenue into 2023 from 2022. Additionally, mgmt. stated that it does not expect
upside in FY23 from the company’s 3Q22 margin structure.
• Definitive Healthcare expects 2023 revenue growth in the mid-teens if the current
environment continues or approaching ~20% with some improvements in the macro.
Additionally, mgmt. has pointed to 2023 EBITDA margins of ~28%, which reflects
continued selective investments, annualization of YTD hiring, cost-of-living
increases on wages, and incremental spend on data sources.
• Evolent Health expects a floor of 25%+ top-line growth in 2023 including 20%
organic growth, with upside coming from additional partnerships signed in 4Q22.
Additionally, mgmt. has spoken to EBITDA margin expansion vs. 2022 and cash
generation greater than $120M before interest. We would also point to an
incremental $250M of revenue and $50M in EBITDA from the recent NIA
acquisition, which we have not incorporated into our model as it has not yet closed.
• Health Catalyst spoke to mid- to high-single-digit new DOS subscription customers
expected in 2022, and 97-101% dollar-based retention – both of which should drive
12
revenue growth for 2023. The company has also spoken to being ahead of schedule
for its 2022 cost-reduction program with cost-savings actions also coming in 2023.
• Health Equity expects FY24 revenue of $950-970M, which equates to 12-13% YoY
growth. This guide is based on a 2.25% average HSA cash yield, which is based on
mgmt’s view of 2024’s interest rate conditions. On the bottom line, mgmt. expects
EBITDA margins at 33-34% of revenue, which would result in ~240bps of leverage
from FY23 at the midpoint. Mgmt. stated that the FY24 guidance does not include
any additional acquisitions for FY23 or FY24. We’d also point to management
expectations for member interest rates to increase slightly (noting in our mgmt
follow-up the company spoke to ~5bps of increase).
• IQVIA has repeatably restated its 2025 targets calling for $20B of revenue, which
implies a 10-12% revenue CAGR through 2025 ex COVID & FX. In terms of 2023
specific commentary, IQV has spoken to accelerating its cost-reduction program
resulting in expectations of modest margin expansion in 2023. However, mgmt. also
noted continued inflation and labor pressures and higher interest expense of $560-
600M. Mgmt. has also noted plans to pay down debt with cash flow of ~$2B in
FY23 used for debt paydown, acquisitions, and share repurchases.
• Omnicell expects hospital budgetary constraints to continue through 2023.
Additionally, mgmt. expects the company’s semiconductor supply to last for a “good
portion of 2023.” We would note that the company recently announced a 9%
reduction in its workforce, which was a cost abatement measure, and reduces the
likelihood that op ex would have trended up from the fourth quarter based on the
recent pace of hiring.
• Progyny has spoken to expectations for 370 clients in 2023 and about 5.4M covered
lives, representing 27% and 17% growth, respectively. The company also has guided
flat organic growth from existing clients versus the historical 100-200K annual life
increase rate, which accounts for potential weakness in the labor market in the
upcoming year.
• R1 RCM guided to 10-15% below Street consensus for 2023 EBITDA, which
equates to ~$595M. Additionally, mgmt. has outlined a number of headwinds that
should persist beyond 3Q and into 4Q including customer implementation
difficulties, which should start to correct in 4Q (with associated costs to continue to
drag on EBITDA), elongated payer reimbursement turnaround times with
management investing to bolster capacity with expectations for continued impact
into 2023, and weaker utilization in 2023, which impacts NPR under management.
We also point out that 2023 outlook is embedding expectations for reduced
collections in the event of a recession, noting patient self-pay comprises ~20% of
collections.
• Veeva expects to meet its CY25 target of $3B in revenue run rate with a 35% EBIT
margin floor a year ahead in CY24. This includes ~$1.2B in Commercial Solutions
revenue and ~$1.8B in R&D Solutions revenue. Mgmt. also has noted headwinds
and tailwinds for next year, which include tailwinds such as positive momentum in
the R&D Solutions segment as VEEV is working with more and more of the top 20
across various solutions like CDMS as well as the Link opportunity in Commercial.
We would also note VEEV is beginning its price increase program next year, with
yearly increases being the lesser of 4% or CPI growth. Looking at headwinds for the
model, while the macro has not changed, mgmt. has noted it is factoring in increased
deal scrutiny, continued weakness in SMB, and FX headwinds. Further, mgmt. has
clarified the $60M revenue impact to subscription revenue as a result of VEEV’s
TFC actions will mostly impact R&D Solutions Subscription revenue in 1Q (60%).
13
Finally, mgmt. has mentioned the revenue impact from the 10% reduction in sales
reps largely took place this year, but the revenue impact will flow through 2024.
Where We’ve Done Some Extra Math on the Models

Evolent
• We see a clear path to more than 25%+ revenue growth next year. Following the
acquisition announcement of NIA, EVH guided for revenue growth to exceed 25%
in 2023 before NIA contribution (see our announcement recap note here). Our
bottom-up build for Evolent supports this and points to >25% revenue growth next
year, inclusive of 13 announced partnerships YTD. Putting the new partnerships into
our bottom-up build, we estimate new partner revenue of $130M in 2023, same-
store revenue of ~$81M (assumes mid-teens same-store revenue growth), and a
combined ~$207M from Vital Decisions & IPG equating to ~25% 2023 YoY
growth. For EBITDA, assuming Vital Decisions EBITDA margins of 20%, IPG
EBITDA margins of 18%, and EVH core margins of 7.3%, we estimate 8.6%
consolidated EBITDA margins for 2023 to $145M, a 30bp improvement to account
for contract maturation and scale.
• For the 2024 build, we are assuming 15% growth in EVH’s core business (in line
with LT targets), Vital Decisions growth of 40%, and IPG growth of 20%, which
sum to $1,946M in revenue, or 16% YoY growth. On EBITDA, taking the low end
of mgmt. commentary for a baseline of $150-200M in core EVH EBITDA in 2024,
and factoring in no margin expansion at Vital Decisions and IPG, we estimate
EBITDA of $197M, or 10.1% margins.
• Areas of conservatism in our build include: 1) We are using the low end of
mgmt’s target for $150-200M in 2024 EBITDA, which equates to 25% EBITDA
upside relative to our estimates, 2) no margin expansion in EVH’s acquired
businesses, and 3) 15% core EVH growth in 2024, which is a number the company
has recently exceeded.
• Looking at the NIA acquisition, assuming a full-year contribution in 2023 would
imply incremental NIA revenue of $250M at 20% EBITDA margins. This would
bring our pro forma revenue to $1,927M at 10% EBITDA margins, or $195M in
EBITDA. For 2024, assuming flat EBITDA margins and factoring in NIA reaching
$85M of run-rate EBITDA by YE24 (in line with mgmt. guidance) implies ~36%
revenue growth to $340M and ~$68M of NIA EBITDA. This would bring pro forma
EVH 2024 revenue to $2,286M in revenue with $265M in EBITDA, or 11.6%
EBITDA margins. We note we are not updating our estimates yet to reflect NIA as
the deal has not closed.
14
Table 5: EVH Revenue & EBITDA Build, 2022-24E

2022 2023 2024
Revenue Bottom Up Build 1343 1677 1946
Growth 25% 16%
Core EBITDA 86 107 150

Implied Core EBITDA Margins 7% 7% 9%
Vital EBITDA 6 8 11
Vital Margins 20% 20% 20%
IPG EBITDA 10 30 36
IPG Margins 18% 18% 18%
EBITDA Bottoms Up Build 102 145 197
Implied Margins 8% 9% 10%
Source: J.P. Morgan estimates, Company data.
R1RCM
• We see weakened revenue growth due to mgmt’s conservative approach to

utilization. Our bottom-up build points to 2023 revenue of $2.3B comprised of (1)
$1.5B from net operating fees, assuming a flat run rate from 4Q and layering on
$140M from Sutter while assuming no incremental partnership adds ($4B below
mgmt’s NPR target); (2) $80M of incentive fees, assuming a flat run rate from 4Q
(noting that management spoke to “a couple of quarters” to get back to normal) with
1Q $15-17M seasonally lower; (3) $120M of R1RCM modular revenue assuming
flat sequentially from 4Q (will take 2-3 quarters to recover); and (4) $575M of
Cloudmed revenue assuming 20% growth off of the 4Q $120M run rate.
• We sensitized our 2023 revenue waterfall by utilization (noting we assumed 95%
utilization prior to 3Q) and found that every 100bps of weakness in utilization
corresponds to ~60bps of revenue growth headwinds in 2023. We note mgmt. spoke
to challenges establishing a baseline for utilization in 2023, and RCM will be taking
a conservative approach to utilization in its 2023 guide. On the bottom line, we
model 2023 EBITDA of $595M, in line with management guidance for 10-15%
below Street consensus, and equating to 25.9% margins.
M&A Was a Key Growth Driver in 2022

In FY22, there were nine acquisitions in our coverage universe totaling $5.5B. A
majority of the acquisitions were centered on technology and intelligence solutions as
well as analytics. RCM led the group with its $4.1B acquisition of Cloudmed, followed
by EVH with two acquisitions this year totaling ~$1B. We would also note that 5
companies within our coverage universe were acquired this year (Cerner by Oracle,
Change Healthcare by United Healthcare, Convey by TPG Capital, Signify by CVS
Health, and BenefitFocus by Voya Financial).
15
Table 6: 2022 Acquisition Overview: HCIT Coverage Universe

Acquiree Purchase Price Acquiree Overview
CCSI Summit Healthcare $12.2M, net of cash acquired Provider of healthcare interoperability solutions
EVH NIA $650M Specialty benefit management company
EVH IPG $375M Technology and service company focused on musculoskeletal conditions
HCAT KPI Ninja $21.4M Provider of interoperability solutions and health analytics
HCAT ARMUS $9.4M Clinical registry development and data management technology company
NXGN TSI Healthcare $68M Value-add reseller with a focus on client retention and EHR software
OMCL Marke Touch $82M Pharmacy technology solutions company
PINC TRPN Direct Pay, Inc and Devon Health $177.5M Assets include national provider contracts and licenses
RCM Cloudmed $4.1B Revenue intelligence solutions company
Source: Company reports.
16
NT Macro Pressures in Our Coverage

Include Labor Shortages, Hospital Spending
Pressures, and Reduced Life Sciences
Funding
Throughout the year, the healthcare space has experienced several macro pressures
including labor shortages, increased hospital spending, inflation, and reduced Life
Sciences funding, which have impacted performance across the Healthcare Technology
space. While the timeline for macro headwinds clearing is difficult to predict, we expect
these headwinds to persist NT.
Figure 7: Near-Term Macro Pressures
Source: J.P. Morgan estimates, Indeed.com, American Hospital Association (AHA), Kaufman Hall’s The Current State of Hospital
Finances: Fall 2022 Update, Bloomberg Finance L.P.
Labor Pressures Arose Prior to COVID and Remain a NT

Headwind
The healthcare industry faced labor headwinds prior to COVID, driven by an aging US
population that increases the amount of people needing care while also reducing the
labor force (47% of RNs were over 50 years old in 2018). COVID catalyzed this issue
by increasing care demand, which led to longer and busier work weeks, resulting in
burnout and reduced labor supply. As it stands today, healthcare employment remains in
line with pre-pandemic levels despite elevated demand, unemployment levels have
normalized near the pre-pandemic average of ~2%, and there are ~91% more physician
job openings compared with pre-pandemic levels. This has led to a handful of
downstream issues such as wage inflation and increased workloads. (See our labor
shortage deep dive here.
The Scope of the Labor Issue

Prior to COVID, the Health Care and Social Assistance Sector, as defined by the Bureau
of Labor Statistics, hovered around 2% unemployment levels, with the quits rate at
~2%, and new job openings averaging 1.15M in the first three months of 2020. In all,
employee count in the industry was ~20.7M, and there were already labor shortages
from an aging workforce and increased demand for care of the aging population in the
US.
17
Figure 8: Estimated Percentage of the Population over 65 Years of Age
100M 23% 25%

22% 22%
90M 21%
80M 20%
17%
70M 15%
60M 15%
50M
40M 10%
30M
20M 5%
10M
0M 0%
2016 2020 2030 2040 2050 2060
65+ Adults Percentage of Population
Source: US Census Bureau.
Table 7: Healthcare Occupations with Projected Supply Gaps through 2025 (as of 2017)
Occupation Growth New Job Openings by 2025 Expected Workforce gap by 2025
Home Health Aid 32% 423,200 -446,300
Nursing Assistant 16% 407,396 -95,000
Medical and Clinical Lab Technologists 13% 49,400 -58,700
Medical and Lab Technicians 18% 60,717 -40,000
Nurse Practitioners 30% 51,445 -29,400
Physicians and Surgeons, all other 16% 102,970 -11,000
Source: Mercer's US Healthcare External Labor Market Analysis (2017). Calculations by Mercer's Workforce Strategy & Analytics Practice.
When COVID surged in March 2020, employment numbers dropped to ~18.5M and just
recently rebalanced to pre-pandemic levels.
Figure 9: All Employees: Health Care and Social Assistance (in Thousands)
21,500
21,000
20,500
20,000
19,500
19,000
18,500
18,000
Jan-20
Jan-21
Jun-21
Jun-22
Feb-20
Mar-20
Jun-20
Nov-20
Dec-20
Feb-21
Jan-22
Mar-21
Nov-21
Dec-21
Feb-22
Mar-22
Nov-22
Aug-20
Sep-20
Aug-21
Sep-21
Aug-22
Sep-22
Apr-20
Apr-21
Apr-22
May-20
May-21
May-22
Jul-20
Oct-20
Jul-21
Oct-21
Jul-22
Oct-22
Employment Pre-COVID Average
Source: The Bureau of Labor Statistics (BLS).
Despite the normalization of employment levels, the number of job openings has
continually increased from COVID lows and the unemployment rate has normalized to
pre-pandemic levels, indicating a shortage of healthcare employees.
18
Figure 10: Job Openings: Health Care and Social Assistance (in Thousands)
2,500
2,000
1,500
1,000
500
0
Feb-20
Mar-20
May-20
Feb-21
Mar-21
May-21
Feb-22
Mar-22
May-22
Nov-20
Dec-20
Apr-20
Nov-21
Dec-21
Jul-20
Oct-20
Apr-21
Jul-21
Oct-21
Apr-22
Jul-22
Oct-22
Jan-20
Jun-20
Jan-21
Jun-21
Jan-22
Jun-22
Aug-22
Sep-22
Aug-20
Sep-20
Aug-21
Sep-21
Job Openings Pre-COVID Average
Source: BLS.
Figure 11: Unemployment: Health Care and Social Assistance

12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Jan-20
Feb-20
Jun-20
Nov-20
Dec-20
Jan-21
Jun-21
Dec-21
Jan-22
Feb-22
Jun-22
Nov-22
Aug-20
Sep-20
Feb-21
Jul-21
Aug-21
Sep-21
Nov-21
Jul-22
Sep-22
Mar-20
Jul-20
Mar-21
Mar-22
Aug-22
Apr-20
Apr-21
Apr-22
May-20
May-21
May-22
Oct-20
Oct-21
Oct-22
Unemployment Pre-COVID Average
Source: BLS.
This shortage in the labor force is echoed by an increase in the number of quits in the
industry, which is a measure of 1) employees’ confidence in getting new jobs and 2)
employees' sentiment in staying in the industry, along with other factors that lead to
employees voluntarily leaving their jobs. When analyzing the quits rate in the Health
Care and Social Assistance space, we found the quits rate has remained elevated above
the pre-COVID average since March of 2021.
19
Figure 12: Quits Rate: Health Care and Social Assistance

3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0% Mar-20
May-20
Feb-21
May-21
Feb-22
Mar-22
May-22
Feb-20
Mar-21
Apr-20
Oct-20
Jul-20
Nov-20
Dec-20
Apr-21
Oct-21
Oct-22
Jul-21
Nov-21
Dec-21
Apr-22
Jul-22
Jan-20
Jun-20
Jan-21
Jun-21
Jan-22
Jun-22
Aug-20
Sep-20
Aug-21
Sep-21
Aug-22
Sep-22
Quits Pre-COVID Average
Source: BLS.
To frame the labor issue hospitals are currently facing, which is placing outsized focus
on workforce management above all else, we point to Indeed.com jobs posting data that
highlight nursing job postings are 67% above pre-pandemic levels while physician and
surgeon job postings are 91% above vs. the US aggregate average of 52%.
Figure 13: US Job Postings, Feb 2020-Nov 2022
100
80
60
40
20
-20
-40
-60
US Aggregate Physicians & Surgeons Nursing
Source: Indeed.com.
The Potential Impact of Rising Unemployment on Benefits

Providers
The unemployment rate remained stable at 3.8% from June through August and dropped
to 3.3-3.4% in September-November following a decline from peak levels in March
2020 at the height of COVID. We also looked at white collar employment trends (US
Management, Professional, and Related Occupations) given HQY’s and PGNY’s
exposure to self-insured employers. We found this rate also remained steady at ~2.4% in
July and August and then dropped to 1.8% in September where it remained for
November (2018-19 average of 2.1%).
20
Despite recent trends, current projections show the unemployment rate rising to ~4.4%
next year, and Fed commentary has echoed this, with Fed Chair Powell saying in a
September press conference, “The labor market continues to be out of balance” and
“FOMC participants expect supply and demand conditions in the labor market to come
into better balance over time.”
Figure 14: US Unemployment Trend

16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
White Collar Unemployment* US Unemployment

Pre-COVID White Collar Unemployment Average Pre-COVID US Unemployment Average
Source: BLS.
Should the US enter into a recession in 2023, we expect the unemployment rate to rise,
which could result in reduced HSA account growth for HQY as employers cut
headcounts and reduce hiring. Additionally, PGNY would likely be negatively impacted
by a rise in unemployment as the company's utilization depends on the number of
employees its customers have, and less competition for employees could slow benefit
adoption. While no impact is seen to date, we will continue to monitor these trends.
Increased Hospital Spending Continues to Impact Margins

As a result of the increasing labor shortage across the healthcare space, labor costs are
rising significantly, leading to budget constraints, which means elongated sales cycles
for the Healthcare Technology space. To compete in the tight labor market, hospitals
have increased staff wages and have also increased their dependence on contract labor.
This has caused labor expenses to rise, while putting a strain on hospitals’ wallets.
Reflecting hospitals’ increased dependence on contract labor, the number of job

postings for travel nurses increased at a ~30% CAGR from January 2019 to January
2022. This comes as hospitals across the nation scramble to fill staffing gaps.
Additionally, as these hospitals increased labor expenses to address staffing shortages,
their personnel expenses per admission increased by 34%+ from the pre-pandemic
average, having peaked at 44% over the average in 2Q22. We expect this pattern to
persist in the NT as hospitals continue to face labor shortages. For more on labor issues
in healthcare, you can see our labor deep dive here.
21
Figure 15: Job Postings for Travel Nurses Figure 16: Hospital Personnel Expenses per Admission Compared to
Pre-Pandemic Averages
31,309 50%
40%
30%
14,328 20%
10%
0%
-10%
Jan-19 Jan-22 -20%
Source: American Hospital Association (AHA). Source: Bloomberg Finance L.P.
As labor expenses rapidly increase, revenues are lagging behind, negatively impacting
margins. According to Kaufman Hall’s Fall 2022 Update for The Current State of
Hospital Finances, US hospitals are projected to see operating margins of about -40%
for 2022 relative to 2019. As hospitals continue to see slower revenue growth relative to
expenses due to increasing labor costs, we expect continued headwinds in our
Healthcare Technology space.
Figure 17: Hospital Operating Margin Impact Relative to 2019
-4%
-25%
-37%
-102%
2020 2021 Jan - Jun 2022 2022E
Source: Kaufman Hall’s The Current State of Hospital Finances: Fall 2022 Update.
A Decline in Life Sciences Funding Has Resulted in Belt-

Tightening
Following peak funding levels during the pandemic, the Life Sciences market is seeing
lower funding relative to 2021, which has resulted in challenging selling cycles for
companies that sell into this market. 2021 seems to be an outlier as venture funding
reached record levels, which were soon followed by declines in 2022.
The drop in the number of US Biopharma IPOs is a key indicator of reduced funding
and investments across the Life Sciences space. In 2021 there were 86 $25M+
Biopharma IPOs compared with only 8 YTD. As Life Sciences companies continue to
see reduced levels of funding and place additional scrutiny on their investments, we
expect Healthcare Technology companies that sell into this end-market to experience
continued headwinds.
22
Figure 18: Number of >$25M Biopharma IPOs in the US, 2021-2022

31
25
20
10
2 3 2 1
1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 QTD

Source: Bloomberg Finance L.P.
Compiling Commentary: A Weakening Macro Is Tightening

Belts Across Healthcare, with Headwinds Expected to Be
Sustained into 2023
We thought helpful to zoom out and frame the macro by looking at end-market
commentary from other Healthcare Technology companies as well as the providers
themselves. Overall, it seems these issues are expected to persist into 2023.
Healthcare Technology Commentary on Life Sciences

Life Sciences end markets have been experiencing macro headwinds in part from lower
funding levels relative to pandemic highs. As a result, companies that sell into this
market have experienced some selling challenges as belts tighten. A key takeaway we
found is that the impact has been different for each business, and is largely dependent on
which area of biopharma a business is targeting (commercial, research, development,
small, large, etc.).
• Veeva Systems Investor Day and 2Q Macro Commentary:

• Investor Day on 11-3-22: “We saw no material weakening or strengthening of
the macro environment or customer sentiment over the past 90 days.”
• 2Q Earnings on 8-31-22: “It’s (macro dynamics) impacting commercial a bit
more. We’ve seen some impact across as advertising budgets have tightened a
bit. And we also saw a little bit of lower add-on users from SMB customers in
the CRM and bulk commercial. We want to point out that R&D has not really
been impacted by the macro.”
• IQVIA has not seen any slowdown in the demand environment despite peers
citing some weakness – 10-26-22 Macro Commentary:
• “EBP funding improved, in fact, in the quarter. According to BioWorld, third-

quarter funding was $18.7 billion, the highest of any quarter this year. Year-to-
date, funding is running at about a $60 billion annual rate, which exceeds the
average of the last 5 years pre-COVID.”
• “Our Q3 book-to-bill was 1.39 times, excluding pass-throughs, and 1.27 times,
including pass-throughs… our backlog grew 5.4% versus prior year on a
reported basis and 9.4% excluding the impact from foreign exchange. As you can
tell, we are not experiencing any signs of slowdown in demand.”
23
• “We are anticipating some minor delays in the timing of deliveries caused by
this macro disruption and specifically by the bottlenecks that are created by
staff shortages at certain sites and that are delaying the execution of our
deliveries.”
• “I’m looking at every number possible. On the demand side, we see no change.
It’s widespread, large pharma, EBP. We’ve been saying this for the... from the
beginning of the year. You guys are not believing us, but the numbers are
showing – and I guess everyone else is coming to the story as well.”
• Definitive Healthcare 3Q Macro Commentary from the 11-3-22 Call:
• “Building on the trend we saw last quarter, deal cycles continued to elongate as
customers implemented more stringent approval processes or pushed-out final
decisions to later periods. And while in Q2, we saw this behavior primarily
among new customers, in Q3 this trend expanded to also include upsells to
existing customers.”
• “We saw this trend more often with our life science prospects and customers
and our provider prospects and customers.”
Healthcare Technology Commentary on Providers

Recent Healthcare Technology commentary on the macro reflects elongated deal
timelines and slower uptake of solutions, which is similar to Life Sciences. In this case,
the belt tightening is mostly due to labor and other costs rising faster than revenue,
which is putting a strain on provider budgets. As this persists, both Healthcare
Technology companies and providers may experience extended headwinds well into
2023.
• R1 RCM 3Q Macro Commentary from the 11-8-22 Call:
• “We experienced an elongation in payer reimbursement turnaround times,

which in turn impacted several key performance metrics that our incentive fees
are tied to.”
• “Finally, we are taking a cautious view… on a couple of environmental factors,
namely the effect of inflation as well as consumer payments for patient out-of-
pocket expenses.”
• “Demand overall for Cloudmed remains strong given our unique capabilities
and the ongoing labor-driven challenges that providers are facing.”
• “Incentive fee revenue was also lower than we expected due to volatility in KPI
metrics at two operating partner customers where we commenced onboarding
in 2021.”
• Omnicell 3Q Macro Commentary from the 11-2-22 Call:
• “The economic environment, including its effect on our health system customers,
shifted rapidly toward the end of third quarter. This has caused many health
systems to implement capital budget freezes and additional budget approval
processes, which is resulting in elongated sales cycles.”
• “At the same time, ongoing health system labor constraints have continued to
increase, which has resulted in a higher-than-typical number of customers
requesting to temporarily defer point-of-care implementations.”
• “No, we are not reaffirming the 2025 framework, but we remain committed to
24
these targets. We cannot reaffirm the timing at this point.”

• Health Catalyst 3Q Macro Commentary from the 11-8-22 Call:
• “Our health system end market continues to experience meaningful financial

strain, primarily due to significant increases in labor and supply costs without a
commensurate increase in revenue leading to substantial margin pressure. We
anticipate this dynamic will persist for at least the next few quarters.”
• “We experienced an elongation in several of our sales cycles, as many health
systems temporarily paused purchasing decisions to give themselves time to
realign their budgets with their updated financial outlook.”
• Evolent 3Q Macro Commentary from the 11-2-22 Call:
• “With inflation approaching a 40-year high, it’s more important than ever for
risk-bearing healthcare entities to identify ways to deliver high-quality care as
efficiently as possible.”
• NextGen Healthcare 3Q Macro Commentary from the 10-25-22 Call:
• “When we talk to hospitals… it does seem like they are pulling back on their
capital spend because their OpEx has increased so much.”
• “The average physician office where there hasn’t really been any change in
the CapEx, they’re still in the same office, and in fact they’re seeing volumes
increase. And for us, those staffing shortages can be a tailwind for our
managed services business.”
Hospital Commentary
Overall, hospital commentary has reflected the weakness we see in Healthcare
Technology. Our key takeaways from 3Q hospital commentary are 1) labor constraints
are reducing capacity, which lowers utilization, 2) hospitals have a keen focus on
navigating these issues first, which can coincide with longer sales cycles for our
coverage, 3) there is some positive commentary on normalization into 2023, but it is too
early to gauge, and 4) while this is a small sample, we expect these headwinds are
present in aggregate with varying degrees of impact.
• HCA Healthcare (covered by JPM Analyst Lisa Gill) 3Q Macro Commentary

from the 10-21-22 Call:
• “Our capacity constraints in the third quarter were real… in the quarter, we
declined in many instances because we weren’t able to accommodate the
patients, approximately 1% to 1.5% of our total admissions, simply because of
capacity constraints.”
• “Our salary, wages and benefit costs per hour were flat with the second quarter.
That was partially due to a 20% reduction in contract expenses…. That’s the
first quarter in a while where we’ve seen stabilization in our labor costs per
hour.”
• “Non-COVID admissions increased 6.9% in the quarter as compared to the
prior year and were up 2.7% year-to-date.”
• “Contract labor as a percent of SWB, it was about 7.2% for the quarter.”
• Tenet Healthcare 3Q Macro Commentary from the 10-21-22 Call:
• “We are also not seeing evidence of recession-related ‘patient demand
25
changes.’ In fact, we continue to see ongoing recovery in elective diagnostic

procedures, such as in GI, and anticipate seasonal growth in Q4 like in previous
years.”
• “We are dealing with delayed shipments of everything from air handlers to
electric switchboards to infrastructure to get these centers open.”
• “Contract labor utilization... rose to 7.4% of consolidated SW&B.”
• “During July, with the Omicron surge, nearly 10% of our clinical staff in the
hospitals were out at some point in the month due to COVID. These dynamics
led to compressed patient volumes in July and, for us, increased our
procurement of contract labor staff.”
• “Hospital patient volumes improved sequentially during the quarter. We exited
September with adjusted admissions nearly 6% higher than the prior year.”
• Universal Health Services 3Q Macro Commentary from the 10-26-22 Call:
• “Decline in COVID patients resulted in reduced revenues…. While overall

surgical volume tended to recover to pre-pandemic levels, there was a
measurable shift from inpatient to outpatient, resulting in further overall
revenue softness.”
• “While we were able to continue to reduce the amount of premium pay in the
quarter… there was insufficient revenue growth to offset the accelerated rate
of wage increases and other inflationary pressures.”
• “In reaction to the earnings softness experienced this year, we reduced the pace
of our capital expenditures by about 22%.”
• “COVID volumes have declined; non-COVID volumes, electives and other
procedures have been a little bit slower to recover… I think we see them slowly
coming back… we think that will continue into 2023… the pace of that recovery
is… the most important variable as we think about the performance of the Acute
division in addition to the other prevalent item, which of course is just the labor
– the tightness in the labor market.”
• “Premium pay was running about $35 million a quarter in the Acute segment
pre-pandemic. I don’t think it’s realistic to get down to those levels.”
• “If you look at our income statement, clearly the biggest pressure is on the
salary and wage line.”
• Community Health Systems 3Q Macro Commentary from the 10-27-22 Call:
• “Impacts on the top line, including the lower admissions and acuity, along with
elevated contract labor and wage inflation, continued to affect our EBITDA
performance.”
• “Sequentially, we saw improvements in admissions, adjusted admissions and
ER visits. We also improved length of stay, reduced contract labor expense.”
• “CapEx was $284 million compared to $334 million in 2021. We effectively
adjusted our capital expenditures without materially slowing down our growth
opportunities.”
• “We think that there’s a theory that as most people try to get healthcare in
before the end of the year, before their co-pays and deductibles reset, we think
the kind of economic environment will actually add to that pressure this year
for people to think about getting their healthcare in before the end of the year.”
26
Inflation Commentary
Inflation in terms of wages and other costs remains a pressure point in our space, with
many factoring it into 2023 budgeting. That said, we did see some signs of early relief,
with IQV citing attrition moving down from record levels and OMCL revising down its
2022 inflationary headwind.
• Nextgen Healthcare 3Q Company-Specific Inflation Commentary from the 10-

25-22 Call:
• “We’re looking at next year and the following year and thinking about worst-
case scenario, if you’re having to do 8% (wage) increases each of the next two
years, what kinds of adjustments do we need to make in the business to be sure
we hit our – both our growth and profitability goals.”
• IQVIA 3Q Company-Specific Inflation Commentary from the 10-26-22 Call:
• “We have been dealing with operational challenges caused by the global macro
environment, including wage inflation, high levels of attrition, obviously, the
ongoing Russia-Ukraine disruptions, reoccurring China lockdowns that are still
going on. And perhaps that’s a newer development, some staff shortages at
certain investigator sites.”
• “The levels of attrition reached record highs. I mean, you’re talking about
almost 20% sometime in the first part of the year. But we have seen those levels
of attrition come down and stabilized. Now, they’re still very high. It’s now
more in the 16%, 17% type of range and is stabilized there.”
• Premier Inc. 3Q Company-Specific Inflation Commentary from the 11-1-22
Call:
• “We are making incremental investments across the business to drive our
anticipated growth, particularly in our adjacent markets businesses, and to
recruit and retain talent in what continues to be a challenging labor market.”
• Omnicell 3Q Company-Specific Inflation Commentary from the 11-2-22 Call:
• “Inflationary cost headwinds for fiscal 2022, we brought down by a couple of

million, $2 million to $3 million lower than previously expected. Most of that
lower headwind, if you will, for the year is in semiconductors. So we see some
favorability there.”
• R1 RCM 3Q Company-Specific Inflation Commentary from the 11-8-22 Call:
• “We’re going to take a cautious view on some of our environmental assumptions

in the budget, namely the potential impact of inflation.”
Although a NT concern for our space, J.P. Morgan’s Economic Research team forecasts
a decline in inflation in 2023 as the labor market cools. The team expects Core PCE to
drop to 4.0% by 4Q22, then to 2.2% in 4Q23. For more details, see J.P. Morgan’s 2023
US Economic Outlook here.
27
Figure 19: Core PCE Forecast

%q/q, saar
4.50%
4.00%
3.10% 3.10%
2.80%
2.20%
3Q22A 4Q22E 1Q23E 2Q23E 3Q23E 4Q23E
Source: J.P. Morgan estimates., J.P. Morgan’s 2023 US Economic Outlook
28
LT Themes in Our Coverage Include the

Consumerization of Healthcare, Value-
Based Care, Drug Development, and
Fertility
While the short-term macro may muddy the progression of the major themes in our
coverage, we still believe that in the long term the consumerization of healthcare, value-
based care and the progression of data & analytics in healthcare, the drug development
pipeline, and fertility remain the key themes driving growth in Healthcare Technology.
Rising Out-of-Pocket Costs Are Leading to Consumer-

Focused Healthcare
The largest growing payer in the US is the consumer due to the rise in high-deductible
health plans (HDHPs), with the Kaiser Family Foundation (KFF) finding 30% of
workers at firms with >200 employees are enrolled in an HDHPs.
Figure 20: Percentage of Covered Workers Enrolled in an HDHP 2006-2022
35% 32% 33%

30% 30% 29% 30% 30%
30%
24%
25%
19% 19%
20% 17%
15%
15% 12%
10% 6%
4% 5%
3%
5%
0%
Large Firms
Source: Kaiser Family Foundation.
Due to the rise in HDHPs, out-of-pocket (OOP) costs are increasing for consumers to an
estimated national average of $1,366 per capita in 2023, or over 8% of annual household
expenditures. Looking ahead, OOP costs are expected to rise ahead of the Fed’s target
2% inflation rate into 2030, which should place further cost burdens of healthcare onto
consumers.
29
Figure 21: Per Capita Out-of-Pocket Healthcare Expenditures, 2012- Figure 22: Healthcare as a % of Annual Household Expenditures
2028E
$3,000 30.0% 10.0%
9.0% 8.2% 8.1% 8.2% 8.4% 8.1%
20.0% 8.0% 7.8% 8.0%
$2,500 5.7% 8.0%
3.2% 4.0% 4.4% 4.8% 4.3% 3.9% 10.0% 6.9% 7.1%
$2,000 -4.1% 7.0%
0.0% 6.0%
$1,366 $1,425 $1,480
$1,500 $1,184 $1,231 $1,181 $1,233 $1,303 -10.0% 5.0%
-20.0% 4.0%
$1,000 3.0%
-30.0%
$500 2.0%
-40.0% 1.0%
$0 -50.0% 0.0%
OOP Healthcare Costs per Capita YoY Increase
Source: CMS. Source: BLS.
As more costs are shifted to the households, this forces consumers to be more selective
in where they choose to receive care to maximize dollars spent. As a result, healthcare
providers and other healthcare stakeholders are working to create a consumer-friendly
experience with tech innovations such as telehealth and online appointment making.
Moving forward, we expect the consumerization of healthcare will continue to drive
tech adoption in the healthcare industry and serve as a tailwind to our Healthcare
Technology coverage.
The key companies we would highlight that are most exposed to this trend would be
Health Equity, R1 RCM, Doximity, Phreesia, Progyny, IQVIA, and Veeva.
An Increasing Prevalence of Value-Based Care Spurs Data &

Analytics Adoption in Healthcare
The healthcare payment model is transitioning to incentivize value due to outsized
expenditures that are growing at a rate in excess of GDP. Specifically, US healthcare
spend is projected to reach $4.7T in 2023, up from $1.4T in 2000. Value-based care is a
pay-for-performance model that ties healthcare reimbursement to outcomes in an effort
to lower costs and improve care. This differs from the traditional Fee-for-Service (FFS)
method in which providers are paid for the volume of patients seen.
Despite the focus on value-based care, the predominant payment model is still FFS.
According to HCP-LAN, in 2021 40% of US healthcare payments were tied to
alternative payment models (APMs), up from 36% in 2018. We would expect this
percentage to increase as CMS emphasizes the need for a value-based system and as
commercial payers look to transition.
30
Figure 23: US Healthcare Payments in 2021
Two-Sided Risk
APMs, 20% FFS with No
Link to Quality
One-Sided Risk & Value, 41%
APMs, 20%
FFS Linked to
Value, 20%
Source: HCP-LAN.
As providers shift to value-based payment models, this requires a substantial amount of

analysis to measure healthcare cost and quality data, and ultimately this change should
be very beneficial to Healthcare Technology companies. Moving forward, the general
consensus is that value-based care is here to stay, and Healthcare Technology companies
have been preparing accordantly by ramping up data and analytics capabilities in the last
few years in anticipation of higher demand. We would also point to the COVID-19
pandemic as an accelerator for change, as it highlighted flaws in the FFS model.
We bucket companies that enable value-based care in our coverage into three groups:
pure plays & risk takers (Evolent, Signify), tech and analytics enablers (Health
Catalyst, Premier, Definitive Healthcare, IQVIA, R1 RCM, Consensus Cloud
Solutions), and data collectors (EMR Vendors Allscripts, NextGen Healthcare).
Tech Enablement Is a Downstream Impact in the Shift to Value-

Based Care
Looking at the industry backdrop, the global healthcare analytics market is growing at a
22% annual rate and is expected to reach $69B by 2025, up from $14B in 2017. This is
in part due to the shift to value-based care, which requires increased documentation and
analytics as providers must utilize predictive modeling in conjunction with population
health and care coordination to optimize both reimbursement and health outcomes. On
the payer and life sciences side, the same amount of data & analytics is required as
biopharma companies need to prove a drug’s value for payer reimbursement.
Data capture is the first step in this process, and the digitization of health records was
foundational in the ability to shift to a value-based payment method. This resulted in an
unprecedented rise in data, necessitating solutions to utilize data and identify insights to
improve outcomes and reduce costs. Despite the influx of data, healthcare companies
have struggled with adoption of value-based care since they lack the IT resources to
handle the data and the interoperability to properly coordinate care and results.
Healthcare Technology companies and the analytics and infrastructure they provide are
instrumental in helping healthcare organizations overcome this.
31
Other Drivers of Data & Analytics Adoption

While value-based care is driving tech adoption for all, other smaller trends such as the
use of data & analytics in marketing to healthcare companies and physicians along with
the increased prevalence of decentralized trials also are driving adoption of modern tech
and analytical capabilities Healthcare Technology companies offer. Herein we detail a
few case studies to dig deeper into this trend.
Case Study: Data & Analytics in Life Sciences Sales & Marketing
As a result of COVID, providers have reduced the number of in-person meetings they
are willing to take, which increases the importance of each interaction between a
salesperson and a prospect. According to Veeva, there is now a 70/30 split between in-
person and virtual engagement with providers, with 75% of providers wanting to keep
or increase digital interactions with reps. As a result, sales organizations are focusing on
refining and improving each interaction with data & analytics to ensure each in-person
meeting is effective, while also building out omnichannel marketing strategies to meet
the market demand.
Further, the shift to Outpatient Care is creating a complex web of healthcare centers as
more facilities are being introduced into a health system. As a result, understanding a
healthcare provider’s internal network is an increasingly complex task, which makes
selling difficult since sales teams struggle to identify key decision makers and to size the
selling ecosystem. This is increasing demand for contact information solutions, as
libraries of contact information coupled with data & analytic capabilities allow reps to
contact the right people and create data-informed sales pitches.
For background, Inpatient Care is often referred to as being admitted into a hospital or
similar facility at which one can/will stay overnight. Examples of Inpatient Care include
hospitalization overnight from a surgery, recovery from a serious health issue such as a
hip fracture for which one would stay the night(s), and staying overnight after
childbirth. Outpatient Care is also referred to as Ambulatory Care. Examples of
Outpatient Care are primary care, having blood drawn, and checkup-related procedures.
Since Outpatient Care does not require one to stay overnight, it is typically less
complex, requires less intervention, and is often less expensive than Inpatient Care. As a
result, healthcare has been shifting to Outpatient Centers when possible as a key pillar in
the shift to value-based care.
Definitive Healthcare, Veeva, and Doximity.
32
Figure 24: Procedures Performed in Outpatient Clinics, 2016-2021
2016 2017 2018 2019 2020 2021
Source: Definitive Healthcare.
Case Study: Tech Adoption & the Increase in Decentralized Trials

As a result of the pandemic, clinical trials were disrupted due to social-distancing and
quarantine measures preventing in-person interactions. This led to the accelerated
adoption of virtual interactions with participants as well as other virtual elements being
incorporated into trials, sparking an increase in the number of decentralized trials
(DCTs), or trials less dependent on research facilities for data collection and enrollment.
Since DCTs optimize relationships with local labs, providers, and patients by
establishing a virtual network, they in turn accelerate recruitment timelines and improve
diversity in participants, both of which enhance the trials’ data integrity and the patient
experience as travel time is cut down and interactions are faster digitally, with experts
citing travel logistics as a key reason patients drop out of trials. With that, the shift to
trials with DCT components is not going away as COVID subsides as many have
realized the benefits. To quantify this, Science 37, a decentralized trials company, found
in a 2022 survey that hybrid/fully decentralized trials are expected to be used by 69% of
organizations that participate in clinical trials in 2022, up from 51% in the year prior.
Figure 25: Expected and Past DCT Adoption in Clinical Trials Figure 26: Expected Use of DCT Tools in the NTM
86% ePRO/eCOA 59%

69% Remote Patient Monitoring 58%
63%
51% Telemedicine 57%
eConsent 56%
Mobile Nurses 40%
Local Clinics 39%
Wearable Sensors 35%
Traditional Trial Hybrid or Fully Decentralized Trial Metasites/Remote Sites 22%
Previous 12 Months Next 12 Months Home Infusions 20%
Source: Science 37. Source: Science 37.
The cornerstone of DCTs is tech integration and adoption as they enable virtual
interactions and at-home components of a trial. As a result, the demand for solutions
that enable DCTs is rising, and companies with DCT solutions should see long-term
33
tailwinds as the clinical trial industry evolves out of COVID. With that, we expect the
increasing prevalence of DCTs to remain a key theme in our space driving tech
adoption.
IQVIA and Veeva, as both offer DCT solutions.
Patent Cliffs & the Drug Development Pipeline

Companies in our space have identified the “patent cliff” as a key long-term R&D
demand driver of drug development spend as companies need to make up for lost
revenue as they lose exclusive patents on drugs, which allows generic drug makers to
penetrate the market. This is accelerating the number of new molecular entities expected
to be approved from 2022 to 2026, rising to 60 per year vs. 53 over the last decade.
Given that, we found approvals have trended down to 31 in 2022 with just under a
month left in the year vs 50 in 2021 and 53 in 2020.
Figure 27: Novel Drug Approvals, 2006-2022
59
53
48 50
45 46
39 41
30 31
26 27
22 24 22
21
18
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: FDA.
We believe it is prudent to monitor clinical trials and drug approvals for a read into the
drug development cycle as this should impact marketing, development, and tech spend
longer term. For example, IQV cited exposure to this on its 2Q22 earnings call, with
CEO Bousbib saying “The pharma commercial business is largely driven by the net of
new approvals versus patent loss of exclusivity.”
Names we would call out in our coverage with exposure to drug development trends
would be Veeva, Doximity, Definitive Healthcare, Model N, Allscripts, and Phreesia.
The Fertility Industry Still Has Ample Whitespace for Growth

Infertility is a highly prevalent disease affecting one in eight according to the CDC. In
2020, 326,768 ART (Assisted Reproductive Technology) cycles were performed, up
from 148,055 in 2008 resulting in an 8% CAGR over the past 10 years. The acceleration
in ART volumes has been primarily driven by two factors: families are waiting longer to
have children (resulting in reduced fertility), and more families are taking nontraditional
paths to parenthood (i.e., single parents, LGBTQ+ families). While recession concerns
are looming given how expensive IVF treatments are, looking back over the past 15
years of CDC reported data, throughout the last market downturn (when unemployment
34
reached 10%) in 2009, ART (Assisted Reproductive Technology) cycles remained fairly
steady and rebounded quickly. Specifically, average growth in ART cycles over 2005-08
was 3.7%, slowing to -0.50bps in 2009/2010, and returning to 3.2% growth in 2011.
Since that time, cycles have averaged 9% growth, with 2020 seeing a -1% decline due to
COVID (noting the 2021 numbers have not yet been reported). We would expect the
rate of forward growth to continue similarly to the last 10 years’ levels going forward.
We would note that Progyny is the only publicly traded fertility benefits company.
Figure 28: US ART Cycle Volume, 1999-2021E

16%
500,000 13% 11%14%
8% 8% 7% 6% 8% 9% 8% 8% 8% 8% 15%
450,000 4% 5% 3% 3% 4% 3%
-1% 1% -1% 5%
400,000
350,000 -5%
300,000 -15%
250,000 -25%
200,000
-35%
150,000
-45%
100,000
50,000 -55%
0 -65%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021E
US ART Cycles YoY Growth
Source: CDC.gov, J.P. Morgan Estimates.
In 2019, the median age at which women gave birth rose to 30 from 27 in 1990. Note
that 2016 was the first year that more babies were born to women aged 30-34 than to
women 25-29. As a woman’s fertility diminishes with age, the need for Assisted
Reproductive Technology increases, with SART finding in 2020 the national live birth
rate drops to 20% at ages 38-40 from 32% at ages 35-37.
Figure 29: US Live Birth Rate, 2020
45%
32%
20%
10%
3%
<35 35-37 38-40 41-42 >42
Source: SART.
35
The Cost of ART Cycles

Fertility remains an undercovered benefit in the US, leaving much of the market self-
pay. According to a Mercer national survey, only 55% of employers with over 500
employees provided some form of fertility benefits coverage. That improves somewhat
when looking at employers with over 20,000 employees, as only 23% cited no coverage
in 2020. Coverage varies widely, as only 27% of 500+ employers covered IVF and 28%
covered IUI in 2020.
Table 8: Costs of Typical ART Cycles

IVF IUI
Monitoring/Medical $8,000-$14,000 $500-$1400
Medication $3,000-$7,000 $150-$2250
ICSI $1,000-$3,000 NM
PGS Testing $4,800-6,000 NM
Average Cost Per Cycle $23,000 $150-$4,000
Success Rate Per Cycle 20-50% 5-15%
Average Number of Cycles 2.3-2.7x 3-6x
Source: Fertility IQ, J.P. Morgan estimates.
Despite the High Prevalence, Coverage Is Lacking

Growing fertility benefit adoption and the rising number of self-insured employers are
increasing the number of employers that offer fertility coverage, with Fertility IQ citing
the number of large companies that offer or have newly introduced fertility benefits
grew 8% YoY and is approaching 800 companies. A key driver of fertility benefit
adoption is employee retention as companies increasingly are competing for talent by
bolstering benefits packages. Additionally, as the number of US employers naturally
grows, this increases the number of potential clients for fertility benefits adoption.
Larger businesses are more likely to have self-insured health insurance, with the Kaiser
Family Foundation finding in a 2020 study that 84% of employees at employers with
over 200 workers are covered in self-insured plans. Given this, we used the number of
employers with over 1,000 employees as a proxy for the market size of fertility benefit
clients (in line with PGNY’s market sizing methods) and found the number of self-
insured employers is growing ~1.5% yearly since 2017. We expect this growth to
continue beyond 2020 at a growth rate in line with historical averages.
36
Figure 30: Coverage of Fertility Benefits
Evaluations 73%
58%
Drug Therapy 53%

33%
IVF 42%
27%
IUI 38%
28%
No Coverage 23%
39%
Employers with 20,000+ Employees Employers with 500+ Employees
Source: Mercer.
37
Companies Discussed in This Report (all prices in this report as of market close on 13 December 2022)
Benefitfocus(BNFT/$10.40/N), Signify Health(SGFY/$28.35/N)
Analyst Certification: The Research Analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple Research Analysts
are primarily responsible for this report, the Research Analyst denoted by an “AC” on the cover or within the document individually certifies,
with respect to each security or issuer that the Research Analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect the Research Analyst’s personal views about any and all of the subject securities or issuers; and (2) no part of any of the
Research Analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
Research Analyst(s) in this report. For all Korea-based Research Analysts listed on the front cover, if applicable, they also certify, as per KOFIA
requirements, that the Research Analyst’s analysis was made in good faith and that the views reflect the Research Analyst’s own opinion,
without undue influence or intervention.
All authors named within this report are Research Analysts who produce independent research unless otherwise specified. In Europe, Sector
Specialists (Sales and Trading) may be shown on this report as contacts but are not authors of the report or part of the Research Department.
Important Disclosures
Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium
reports and all J.P. Morgan–covered companies, and certain non-covered companies, by visiting https://www.jpmm.com/research/disclosures ,
calling 1-800-477-0406, or e-mailing research.disclosure.inquiries@jpmorgan.com with your request.
Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:
J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average
total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect
this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.]
Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s
(or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this
stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable,
the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia and ex-India)
and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country
market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying
analyst’s coverage universe can be found on J.P. Morgan’s research website, https://www.jpmorganmarkets.com .
Coverage Universe: Samuel, Anne E: Allscripts (MDRX), Benefitfocus (BNFT), Consensus Cloud Solutions (CCSI), Definitive Healthcare
(DH), Doximity (DOCS), Evolent Health (EVH), Health Catalyst (HCAT), HealthEquity (HQY), IQVIA Holdings Inc (IQV), Model N
(MODN), NextGen Healthcare, Inc. (NXGN), Omnicell (OMCL), Phreesia (PHR), Premier, Inc. (PINC), Progyny (PGNY), R1 RCM (RCM),
Signify Health (SGFY), Veeva Systems (VEEV)
J.P. Morgan Equity Research Ratings Distribution, as of October 01, 2022

Overweight Neutral Underweight
(buy) (hold) (sell)
J.P. Morgan Global Equity Research Coverage* 50% 37% 13%
IB clients** 50% 46% 33%
JPMS Equity Research Coverage* 50% 38% 12%
IB clients** 70% 68% 50%
*Please note that the percentages might not add to 100% because of rounding.
**Percentage of subject companies within each of the "buy," "hold" and "sell" categories for which J.P. Morgan has provided
investment banking services within the previous 12 months.
For purposes only of FINRA ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls
into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation
are not included in the table above. This information is current as of the end of the most recent calendar quarter.
Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for covered companies,
please see the most recent company-specific research report at http://www.jpmorganmarkets.com , contact the primary analyst or your J.P.
Morgan representative, or email research.disclosure.inquiries@jpmorgan.com . For material information about the proprietary models used,
please see the Summary of Financials in company-specific research reports and the Company Tearsheets, which are available to download on
the company pages of our client website, http://www.jpmorganmarkets.com . This report also sets out within it the material underlying
assumptions used.
A history of J.P. Morgan investment recommendations disseminated during the preceding 12 months can be accessed on the Research &
Commentary page of http://www.jpmorganmarkets.com where you can also search by analyst name, sector or financial instrument.
38
Analysts' Compensation:The research analysts responsible for the preparation of this report receive compensation based upon various factors,
including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.
Other Disclosures
J.P. Morgan is a marketing name for investment banking businesses of JPMorgan Chase & Co. and its subsidiaries and affiliates worldwide.
UK MIFID FICC research unbundling exemption: UK clients should refer to UK MIFID Research Unbundling exemption for details of
JPMorgan’s implementation of the FICC research exemption and guidance on relevant FICC research categorisation.
All research material made available to clients are simultaneously available on our client website, J.P. Morgan Markets, unless specifically
permitted by relevant laws. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research
material available on a particular stock, please contact your sales representative.
Any long form nomenclature for references to China; Hong Kong; Taiwan; and Macau within this research material are Mainland China; Hong
Kong SAR (China); Taiwan (China); and Macau SAR (China).
J.P. Morgan Research may, from time to time, write on issuers or securities targeted by economic or financial sanctions imposed or administered
by the governmental authorities of the U.S., EU, UK or other relevant jurisdictions (Sanctioned Securities). Nothing in this report is intended to
be read or construed as encouraging, facilitating, promoting or otherwise approving investment or dealing in such Sanctioned Securities. Clients
should be aware of their own legal and compliance obligations when making investment decisions.
Any digital or crypto assets discussed in this research report are subject to a rapidly changing regulatory landscape. For relevant regulatory
advisories on crypto assets, including bitcoin and ether, please see https://www.jpmorgan.com/disclosures/cryptoasset-disclosure .
The author(s) of this research report may not be licensed to carry on regulated activities in your jurisdiction and, if not licensed, do not hold
themselves out as being able to do so.
Exchange-Traded Funds (ETFs): J.P. Morgan Securities LLC (“JPMS”) acts as authorized participant for substantially all U.S.-listed ETFs. To
the extent that any ETFs are mentioned in this report, JPMS may earn commissions and transaction-based compensation in connection with the
distribution of those ETF shares and may earn fees for performing other trade-related services, such as securities lending to short sellers of the
ETF shares. JPMS may also perform services for the ETFs themselves, including acting as a broker or dealer to the ETFs. In addition, affiliates
of JPMS may perform services for the ETFs, including trust, custodial, administration, lending, index calculation and/or maintenance and other
services.
Options and Futures related research: If the information contained herein regards options- or futures-related research, such information is
available only to persons who have received the proper options or futures risk disclosure documents. Please contact your J.P. Morgan
Representative or visit https://www.theocc.com/components/docs/riskstoc.pdf for a copy of the Option Clearing Corporation's Characteristics
and Risks of Standardized Options or http://www.finra.org/sites/default/files/Security_Futures_Risk_Disclosure_Statement_2018.pdf for a copy
of the Security Futures Risk Disclosure Statement.
Changes to Interbank Offered Rates (IBORs) and other benchmark rates: Certain interest rate benchmarks are, or may in the future
become, subject to ongoing international, national and other regulatory guidance, reform and proposals for reform. For more information, please
consult: https://www.jpmorgan.com/global/disclosures/interbank_offered_rates
Private Bank Clients: Where you are receiving research as a client of the private banking businesses offered by JPMorgan Chase & Co. and its
subsidiaries (“J.P. Morgan Private Bank”), research is provided to you by J.P. Morgan Private Bank and not by any other division of J.P. Morgan,
including, but not limited to, the J.P. Morgan Corporate and Investment Bank and its Global Research division.
Legal entity responsible for the production and distribution of research: The legal entity identified below the name of the Reg AC Research
Analyst who authored this material is the legal entity responsible for the production of this research. Where multiple Reg AC Research Analysts
authored this material with different legal entities identified below their names, these legal entities are jointly responsible for the production of
this research. Research Analysts from various J.P. Morgan affiliates may have contributed to the production of this material but may not be
licensed to carry out regulated activities in your jurisdiction (and do not hold themselves out as being able to do so). Unless otherwise stated
below, this material has been distributed by the legal entity responsible for production. If you have any queries, please contact the relevant
Research Analyst in your jurisdiction or the entity in your jurisdiction that has distributed this research material.
Legal Entities Disclosures and Country-/Region-Specific Disclosures:
Argentina: JPMorgan Chase Bank N.A Sucursal Buenos Aires is regulated by Banco Central de la República Argentina (“BCRA”- Central
Bank of Argentina) and Comisión Nacional de Valores (“CNV”- Argentinian Securities Commission” - ALYC y AN Integral N°51). Australia:
J.P. Morgan Securities Australia Limited (“JPMSAL”) (ABN 61 003 245 234/AFS Licence No: 238066) is regulated by the Australian
Securities and Investments Commission and is a Market, Clearing and Settlement Participant of ASX Limited and CHI-X. This material is
issued and distributed in Australia by or on behalf of JPMSAL only to "wholesale clients" (as defined in section 761G of the Corporations Act
2001). A list of all financial products covered can be found by visiting https://www.jpmm.com/research/disclosures . J.P. Morgan seeks to cover
companies of relevance to the domestic and international investor base across all Global Industry Classification Standard (GICS) sectors, as well
39
as across a range of market capitalisation sizes. If applicable, in the course of conducting public side due diligence on the subject company(ies),
the Research Analyst team may at times perform such diligence through corporate engagements such as site visits, discussions with company
representatives, management presentations, etc. Research issued by JPMSAL has been prepared in accordance with J.P. Morgan Australia’s
Research Independence Policy which can be found at the following link: J.P. Morgan Australia - Research Independence Policy . Brazil: Banco
J.P. Morgan S.A. is regulated by the Comissao de Valores Mobiliarios (CVM) and by the Central Bank of Brazil. Ombudsman J.P. Morgan:
0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com . Canada: J.P. Morgan Securities Canada Inc. is a registered investment dealer, regulated
by the Investment Industry Regulatory Organization of Canada and the Ontario Securities Commission and is the participating member on
Canadian exchanges. This material is distributed in Canada by or on behalf of J.P.Morgan Securities Canada Inc. Chile: Inversiones J.P. Morgan
Limitada is an unregulated entity incorporated in Chile. China: J.P. Morgan Securities (China) Company Limited has been approved by CSRC
to conduct the securities investment consultancy business. Dubai International Financial Centre (DIFC): JPMorgan Chase Bank, N.A., Dubai
Branch is regulated by the Dubai Financial Services Authority (DFSA) and its registered address is Dubai International Financial Centre - The
Gate, West Wing, Level 3 and 9 PO Box 506551, Dubai, UAE. This material has been distributed by JP Morgan Chase Bank, N.A., Dubai
Branch to persons regarded as professional clients or market counterparties as defined under the DFSA rules. European Economic Area
(EEA): Unless specified to the contrary, research is distributed in the EEA by J.P. Morgan SE (“JPM SE”), which is subject to prudential
supervision by the European Central Bank (“ECB”) in cooperation with BaFin and Deutsche Bundesbank in Germany. JPM SE is a company
headquartered in Frankfurt with registered address at TaunusTurm, Taunustor 1, Frankfurt am Main, 60310, Germany. The material has been
distributed in the EEA to persons regarded as professional investors (or equivalent) pursuant to Art. 4 para. 1 no. 10 and Annex II of MiFID II
and its respective implementation in their home jurisdictions (“EEA professional investors”). This material must not be acted on or relied on by
persons who are not EEA professional investors. Any investment or investment activity to which this material relates is only available to EEA
relevant persons and will be engaged in only with EEA relevant persons. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE
number AAJ321) is regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission in Hong Kong, and J.P.
Morgan Broking (Hong Kong) Limited (CE number AAB027) is regulated by the Securities and Futures Commission in Hong Kong. JP Morgan
Chase Bank, N.A., Hong Kong (CE Number AAL996) is regulated by the Hong Kong Monetary Authority and the Securities and Futures
Commission, is organized under the laws of the United States with limited liability. Where the distribution of this material is a regulated activity
in Hong Kong, the material is distributed in Hong Kong by or through J.P. Morgan Securities (Asia Pacific) Limited and/or J.P. Morgan Broking
(Hong Kong) Limited. India: J.P. Morgan India Private Limited (Corporate Identity Number - U67120MH1992FTC068724), having its
registered office at J.P. Morgan Tower, Off. C.S.T. Road, Kalina, Santacruz - East, Mumbai – 400098, is registered with the Securities and
Exchange Board of India (SEBI) as a ‘Research Analyst’ having registration number INH000001873. J.P. Morgan India Private Limited is also
registered with SEBI as a member of the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited (SEBI
Registration Number – INZ000239730) and as a Merchant Banker (SEBI Registration Number - MB/INM000002970). Telephone: 91-22-6157
3000, Facsimile: 91-22-6157 3990 and Website: http://www.jpmipl.com . JPMorgan Chase Bank, N.A. - Mumbai Branch is licensed by the
Reserve Bank of India (RBI) (Licence No. 53/ Licence No. BY.4/94; SEBI - IN/CUS/014/ CDSL : IN-DP-CDSL-444-2008/ IN-DP-NSDL-285-
2008/ INBI00000984/ INE231311239) as a Scheduled Commercial Bank in India, which is its primary license allowing it to carry on Banking
business in India and other activities, which a Bank branch in India are permitted to undertake. For non-local research material, this material is
not distributed in India by J.P. Morgan India Private Limited. Indonesia: PT J.P. Morgan Sekuritas Indonesia is a member of the Indonesia Stock
Exchange and is registered and supervised by the Otoritas Jasa Keuangan (OJK). Korea: J.P. Morgan Securities (Far East) Limited, Seoul
Branch, is a member of the Korea Exchange (KRX). JPMorgan Chase Bank, N.A., Seoul Branch, is licensed as a branch office of foreign bank
(JPMorgan Chase Bank, N.A.) in Korea. Both entities are regulated by the Financial Services Commission (FSC) and the Financial Supervisory
Service (FSS). For non-macro research material, the material is distributed in Korea by or through J.P. Morgan Securities (Far East) Limited,
Seoul Branch. Japan: JPMorgan Securities Japan Co., Ltd. and JPMorgan Chase Bank, N.A., Tokyo Branch are regulated by the Financial
Services Agency in Japan. Malaysia: This material is issued and distributed in Malaysia by JPMorgan Securities (Malaysia) Sdn Bhd (18146-
X), which is a Participating Organization of Bursa Malaysia Berhad and holds a Capital Markets Services License issued by the Securities
Commission in Malaysia. Mexico: J.P. Morgan Casa de Bolsa, S.A. de C.V.and J.P. Morgan Grupo Financiero are members of the Mexican
Stock Exchange and are authorized to act as a broker dealer by the National Banking and Securities Exchange Commission. New Zealand: This
material is issued and distributed by JPMSAL in New Zealand only to "wholesale clients" (as defined in the Financial Markets Conduct Act
2013). JPMSAL is registered as a Financial Service Provider under the Financial Service providers (Registration and Dispute Resolution) Act of
2008. Pakistan: J. P. Morgan Pakistan Broking (Pvt.) Ltd is a member of the Karachi Stock Exchange and regulated by the Securities and
Exchange Commission of Pakistan. Philippines: J.P. Morgan Securities Philippines Inc. is a Trading Participant of the Philippine Stock
Exchange and a member of the Securities Clearing Corporation of the Philippines and the Securities Investor Protection Fund. It is regulated by
the Securities and Exchange Commission. Russia: CB J.P. Morgan Bank International LLC is regulated by the Central Bank of Russia.
Singapore: This material is issued and distributed in Singapore by or through J.P. Morgan Securities Singapore Private Limited (JPMSS) [MCI
(P) 060/08/2022 and Co. Reg. No.: 199405335R], which is a member of the Singapore Exchange Securities Trading Limited, and/or JPMorgan
Chase Bank, N.A., Singapore branch (JPMCB Singapore), both of which are regulated by the Monetary Authority of Singapore. This material is
issued and distributed in Singapore only to accredited investors, expert investors and institutional investors, as defined in Section 4A of the
Securities and Futures Act, Cap. 289 (SFA). This material is not intended to be issued or distributed to any retail investors or any other investors
that do not fall into the classes of “accredited investors,” “expert investors” or “institutional investors,” as defined under Section 4A of the SFA.
Recipients of this material in Singapore are to contact JPMSS or JPMCB Singapore in respect of any matters arising from, or in connection
with, the material. As at the date of this material, JPMSS is a designated market maker for certain structured warrants listed on the Singapore
Exchange where the underlying securities may be the securities discussed in this material. Arising from its role as a designated market maker for
such structured warrants, JPMSS may conduct hedging activities in respect of such underlying securities and hold or have an interest in such
underlying securities as a result. The updated list of structured warrants for which JPMSS acts as designated market maker may be found on the
website of the Singapore Exchange Limited: http://www.sgx.com . South Africa: J.P. Morgan Equities South Africa Proprietary Limited and
40
JPMorgan Chase Bank, N.A., Johannesburg Branch are members of the Johannesburg Securities Exchange and are regulated by the Financial
Services Board. Taiwan: J.P. Morgan Securities (Taiwan) Limited is a participant of the Taiwan Stock Exchange (company-type) and regulated
by the Taiwan Securities and Futures Bureau. Material relating to equity securities is issued and distributed in Taiwan by J.P. Morgan Securities
(Taiwan) Limited, subject to the license scope and the applicable laws and the regulations in Taiwan. According to Paragraph 2, Article 7-1 of
Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers (as amended or supplemented) and/or
other applicable laws or regulations, please note that the recipient of this material is not permitted to engage in any activities in connection with
the material that may give rise to conflicts of interests, unless otherwise disclosed in the “Important Disclosures” in this material. Thailand:
This material is issued and distributed in Thailand by JPMorgan Securities (Thailand) Ltd., which is a member of the Stock Exchange of
Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission, and its registered address is 3rd Floor, 20
North Sathorn Road, Silom, Bangrak, Bangkok 10500. UK: Unless specified to the contrary, research is distributed in the UK by J.P. Morgan
Securities plc (“JPMS plc”) which is a member of the London Stock Exchange and is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential Regulation Authority. JPMS plc is registered in England & Wales No. 2711006,
Registered Office 25 Bank Street, London, E14 5JP. This material is directed in the UK only to: (a) persons having professional experience in
matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) (Order) 2005
(“the FPO”); (b) persons outlined in article 49 of the FPO (high net worth companies, unincorporated associations or partnerships, the trustees of
high value trusts, etc.); or (c) any persons to whom this communication may otherwise lawfully be made; all such persons being referred to as
"UK relevant persons". This material must not be acted on or relied on by persons who are not UK relevant persons. Any investment or
investment activity to which this material relates is only available to UK relevant persons and will be engaged in only with UK relevant persons.
Research issued by JPMS plc has been prepared in accordance with JPMS plc's policy for prevention and avoidance of conflicts of interest
related to the production of Research which can be found at the following link: J.P. Morgan EMEA - Research Independence Policy . U.S.: J.P.
Morgan Securities LLC (“JPMS”) is a member of the NYSE, FINRA, SIPC, and the NFA. JPMorgan Chase Bank, N.A. is a member of the
FDIC. Material published by non-U.S. affiliates is distributed in the U.S. by JPMS who accepts responsibility for its content.
General: Additional information is available upon request. The information in this material has been obtained from sources believed to be
reliable. While all reasonable care has been taken to ensure that the facts stated in this material are accurate and that the forecasts, opinions and
expectations contained herein are fair and reasonable, JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively J.P. Morgan) make
no representations or warranties whatsoever to the completeness or accuracy of the material provided, except with respect to any disclosures
relative to J.P. Morgan and the Research Analyst's involvement with the issuer that is the subject of the material. Accordingly, no reliance should
be placed on the accuracy, fairness or completeness of the information contained in this material. There may be data discrepancy in this material
as a result of calculations, adjustments and/or translations to different languages, as applicable. J.P. Morgan accepts no liability whatsoever for
any loss arising from any use of this material or its contents, and neither J.P. Morgan nor any of its respective directors, officers or employees,
shall be in any way responsible for the contents hereof, apart from the liabilities and responsibilities that may be imposed on them by the
relevant regulatory authority in the jurisdiction in question, or the regulatory regime thereunder. Opinions, forecasts or projections contained in
this material represent J.P. Morgan's current opinions or judgment as of the date of the material only and are therefore subject to change without
notice. Periodic updates may be provided on companies/industries based on company-specific developments or announcements, market
conditions or any other publicly available information. There can be no assurance that future results or events will be consistent with any such
opinions, forecasts or projections, which represent only one possible outcome. Furthermore, such opinions, forecasts or projections are subject
to certain risks, uncertainties and assumptions that have not been verified, and future actual results or events could differ materially. The value
of, or income from, any investments referred to in this material may fluctuate and/or be affected by changes in exchange rates. All pricing is
indicative as of the close of market for the securities discussed, unless otherwise stated. Past performance is not indicative of future results.
Accordingly, investors may receive back less than originally invested. This material is not intended as an offer or solicitation for the purchase or
sale of any financial instrument. The opinions and recommendations herein do not take into account individual client circumstances, objectives,
or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipients
of this material must make their own independent decisions regarding any securities or financial instruments mentioned herein and should seek
advice from such independent financial, legal, tax or other adviser as they deem necessary. J.P. Morgan may trade as a principal on the basis of
the Research Analysts’ views and research, and it may also engage in transactions for its own account or for its clients’ accounts in a manner
inconsistent with the views taken in this material, and J.P. Morgan is under no obligation to ensure that such other communication is brought to
the attention of any recipient of this material. Others within J.P. Morgan, including Strategists, Sales staff and other Research Analysts, may take
views that are inconsistent with those taken in this material. Employees of J.P. Morgan not involved in the preparation of this material may have
investments in the securities (or derivatives of such securities) mentioned in this material and may trade them in ways different from those
discussed in this material. This material is not an advertisement for or marketing of any issuer, its products or services, or its securities in any
jurisdiction.
"Other Disclosures" last revised November 12, 2022.
Copyright 2022 JPMorgan Chase & Co. All rights reserved. This material or any portion hereof may not be reprinted, sold or
redistributed without the written consent of J.P. Morgan. #$J&098$#*P
Completed 13 Dec 2022 11:37 PM EST Disseminated 14 Dec 2022 12:15 AM EST
41

Healthcare Technology &amp; Distribution JPM

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Healthcare Technology &amp; Distribution JPM

Uploaded by

Copyright:

Available Formats

J P M O R G A N North America Equity Research

Healthcare Technology &

See page 38 for analyst certification and important disclosures.

employment in a recession. Longer term, we see the shift to value-based care

2022 Exhibited Heightened Challenges

Figure 1: Healthcare Technology YTD Performance vs. SPX (as of 12/13/22)

Source: Bloomberg Finance L.P.

Figure 2: Healthcare Technology Annual Stock Performance, 2018-2022

Source: Bloomberg Finance L.P. Priced as of 12/13/22.

SGFY*: Initial Trading Day (2/11/21)

CNVY*: Initial Trading Day (6/16/21)

Figure 5: Healthcare Technology Coverage Average Forward EV/Sales

HCIT Average Forward EV/Sales

Source: Bloomberg Finance L.P., J.P. Morgan estimates. Priced as of 12/12/2022.

Figure 6: Healthcare Technology Coverage Average Forward EV/EBITDA

HCIT Average Forward EV/EBITDA

Source: Bloomberg Finance L.P., J.P. Morgan estimates. Priced as of 12/12/2022.

Table 1: Healthcare Technology Comparable Valuations

Source: J.P. Morgan estimates, Bloomberg Finance L.P.

Looking Back: Our Top Notes of 2022

Notes with shelf life:

• Actionable Insights: Digging in on Interoperability; a Well-Defined Goal with a

• Definitive Healthcare: Digging Deeper: Compelling Growth Opportunity &

Who Has the Growth and Profitability in

Table 2: Healthcare Technology Top-Line Growth, 2018-2024E

Source: Company reports and J.P. Morgan estimates.

Table 3: Healthcare Technology EBITDA Growth, 2018-2024E

Source: Company reports and J.P. Morgan estimates.

Table 4: Healthcare Technology “Rule of 40,” 2018-2024E

Source: Company reports and J.P. Morgan estimates.

Key Components of the 2023 Models

• Consensus Cloud Solutions expects slower decision cycles to shift ~$3M of

Where We’ve Done Some Extra Math on the Models

Table 5: EVH Revenue & EBITDA Build, 2022-24E

Core EBITDA 86 107 150

Source: J.P. Morgan estimates, Company data.

• We see weakened revenue growth due to mgmt’s conservative approach to

M&A Was a Key Growth Driver in 2022

Table 6: 2022 Acquisition Overview: HCIT Coverage Universe

Source: Company reports.

NT Macro Pressures in Our Coverage

Figure 7: Near-Term Macro Pressures

Labor Pressures Arose Prior to COVID and Remain a NT

The Scope of the Labor Issue

Figure 8: Estimated Percentage of the Population over 65 Years of Age

100M 23% 25%

65+ Adults Percentage of Population

Source: US Census Bureau.

Employment Pre-COVID Average

Source: The Bureau of Labor Statistics (BLS).

Figure 11: Unemployment: Health Care and Social Assistance

Figure 12: Quits Rate: Health Care and Social Assistance

Figure 13: US Job Postings, Feb 2020-Nov 2022

US Aggregate Physicians & Surgeons Nursing

The Potential Impact of Rising Unemployment on Benefits

Figure 14: US Unemployment Trend

White Collar Unemployment* US Unemployment

Increased Hospital Spending Continues to Impact Margins

Reflecting hospitals’ increased dependence on contract labor, the number of job

Jan-19 Jan-22 -20%

Source: American Hospital Association (AHA). Source: Bloomberg Finance L.P.

Figure 17: Hospital Operating Margin Impact Relative to 2019

2020 2021 Jan - Jun 2022 2022E

A Decline in Life Sciences Funding Has Resulted in Belt-

Healthcare Technology & Distribution JPM

Healthcare Technology & Distribution JPM